Supplies ‘not connected to Australia’

As a general rule, the following transactions are no longer connected with Australia for non-residents suppliers, and therefore the non-resident supplier will not be subject to GST on these transactions:

supplies of intangibles (such as services and digital products) which are done in Australia are not connected if the recipient is an Australian-based business recipient or a non-resident acquiring the intangibles for their overseas enterprise

a transfer of ownership of leased goods which are located in Australia, where the transfer takes places between non-residents that do not have an enterprise in Australia

a supply of goods where the supplier installs or assembles the goods in Australia, but does not import the goods into Australia.

Non-resident business turnover for GST

GST-free supplies made by a non-resident business is not counted as part of their turnover for GST when the supply is not made through an enterprise they carry on in Australia.

GST-free supplies are only included in a non-resident’s GST turnover if the supply is made through an enterprise they carry on in Australia.

Non-residents businesses with an Australian resident agent

Non-residents and their resident agents can agree the resident agent is liable for GST in relation to supplies made through the agent. Both the non-resident supplier and the agent must specifically agree to this in writing.

Where there is no agreement in writing between the non-resident supplier and the resident agent, in certain circumstances, the recipient of the supply would be required to reverse charge the supply and account for any GST.

Reverse charge for supplies

Generally, for business to business transactions performed in Australia by non-residents, the recipient of the supply will be liable to pay the GST if the recipient is an Australian based, GST registered business and acquires it not wholly for a creditable purpose. You acquire for a creditable purpose if you acquire for the purpose of your enterprise and the acquisition does not relate to making input-taxed sales. This is known as reverse charging.

Australian business

More supplies of services by Australian businesses to non-resident businesses will now be GST-free. This reduces the need for a non-resident business to interact with the Australian GST system to claim input tax credits.

Examples of supplies that may now be GST-free include:

when an Australian business makes a supply of training services to an overseas company, but provides those services to one of the company’s employees in Australia

when an Australian business supplies repair services to an overseas company, but the supply is provided to an entity in Australia in order to fulfil the overseas company’s obligations under a warranty.

GST-registered importer

If you are a GST-registered importer, to calculate the value of the taxable importation for GST purposes, you are no longer required to identify the exact amount paid for:

international transport

insurance

loading or handling

service costs for the transport.

You may opt to use an uplift factor, which is currently 10% of the customs value of the imported goods.

Legislation and supporting material

Information clarifying recent changes to Australia’s GST law, which mean from 1 October 2016, certain transactions between overseas businesses and Australian businesses will no longer be subject to GST.

Our commitment to you

We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations.

If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take.

Some of the information on this website applies to a specific financial year. This is clearly marked. Make sure you have the information for the right year before making decisions based on that information.

If you feel that our information does not fully cover your circumstances, or you are unsure how it applies to you, contact us or seek professional advice.